Shifting Financial Marketing into Gear
The Difference is in the Pitch: Private Equity Pitchbooks vs. Hedge Fund Pitchbooks
When it comes to pitchbooks, there is a clear difference between pitchbooks designed to serve the goals of private equity firms and those developed for commodity trading advisors (CTAs), emerging managers, and hedge funds.
Private equity pitchbooks are typically much more detailed in terms of providing extensive information on a company and its team members. Hedge fund pitchbooks, on the other hand, focus more on a single strategy, product, or program and include performance data.
This is not to say that one type of pitchbook is better than the other – it simply depends on what you are trying to achieve with your pitchbook and who your audience is.
In this article, we will take a closer look at these two types of pitchbooks and discuss some of the key differences (and similarities) between them.
The Definition of a Pitchbook
As a refresher, let’s review what a pitchbook is and what it’s used for.
A pitchbook is a key marketing tool used by private equity firms, hedge funds, money managers, crypto firms, wealth managers, and CTAs which highlights the unique value of an investment enterprise, company, strategy, or program to earn buy-in from investors or to raise assets for management.
Often presented to prospective high-net-worth clients and investors and serving as an outline for deeper discussions with the manager, the pitchbook showcases proprietary information and is often created as a PowerPoint presentation that can range in length (with a common minimum of 20 slides).
While the TYPE of pitchbook will dictate the content, overall, a pitchbook is designed as an elegant overview and analysis of a company and its team members, funding data, investment strategy, market projections, partners, proprietary strategy, program performance, and expertise of key principals.
Universal Pitchbook Elements
Elements that are universal for all professional pitchbooks, regardless of the type of pitchbook include:
- The Right Amount of Content – Pitchbooks are in a format that is presented at a certain speed and pace, so each slide needs to hold just the right amount of content intended to impact the intended audience in the space and time that each slide is shown during the presentation pitch.
- The Right Message – Pitchbooks must effectively communicate the right strategy and brand messages in a format that is presented at a certain speed and pace, so each slide of a pitchbook needs to hold the correct key messages to maximize the impression on the intended audience.
- The Right Order – Every chronological story has a narrative flow and every pitchbook needs its own ordered flow to properly tell a fund or firm’s story in a way that makes the most sense to the audience. This means having a logical narration and order.
- The Right Supporting Visuals – A successful pitchbook will have the correct balance of textual information and supporting visual elements. Visual learners make up 65 percent of the population. Many people have a hard time retaining text, spoken word, and even personal experiences to learn new things.
- The Right Design Elements – Most decisions start with the eyes. The optical nuances of how information is presented helps steer decisions, so the thoughtful use of design elements in a pitchbook is critical. The polish and presentation of the pitchbook is purpose-made to underscore competence and build investor confidence.
- The Right Document Format – The pitchbook is a true living document that is valuable as exclusive information, and it should be digitally handled with care. Additionally, the format should allow for physical printable versions, if necessary, as well as the creation of PDF versions that can be sent to potential investors.
Now that we’ve provided a refresher on what a pitchbook is and have cited what pitchbooks tend to have in common, let’s dive into the differences between private equity pitchbooks and hedge fund pitchbooks.
What is the Difference Between a Private Equity Fund and a Hedge Fund?
Confusion exists about the difference between private equity funds and hedge funds. Both are types of alternative investments, but they have very different fund structures and targets. Private equity funds invest in companies, by either purchasing private firms or buying a controlling stake in publicly traded companies. Hedge funds, on the other hand, use special investment strategies to earn market returns for their investors. Private equity funds tend to focus on private companies while hedge funds tend to invest in publicly traded companies.
Pitchbooks for Private Equity Firms
Private equity refers to capital investment made into companies that are not publicly traded, so if you are working in the private equity industry, it goes without saying that a pitchbook is important as a sales and marketing tool in providing data-backed company details.
But even private equity firms must recognize that the humans being presented to will likely need more than just numbers to be won over. Private Equity firms must keep a few special points in mind when developing pitchbooks:
- Statistics Reinforced by Stories – By nature, people remember stories over statistics, so a data-heavy, numbers-heavy pitchbook must not only show (the data) but passionately tell the story behind those metrics.
- Gathering Stories through Employees and Clients – People are pattern-seeking storytellers, so success stories of a company, through the eyes of employees, clients, associates, or partners carries weight in any pitch.
While quantitative company data is critical to a private equity pitchbook, by ensuring that qualitative brand storytelling is part of the mix, these types of pitchbooks will be able to successfully communicate the value of a firm, its viability as an investment, its people, and its plans for growth.
While private equity pitchbooks must adhere to corporate branding guidelines, they can leverage design elements to not only help emphasize brand association and recognition but help highlight the company’s value and differentiation in a unique way that builds investor confidence – and leaves them remembering the brand stories.
Pitchbooks for Hedge Funds
Emerging managers, commodity trading advisors (CTAs), and hedge funds rely on pitchbooks as a primary marketing tool to build AUM. A pitchbook can help make or break an emerging strategy or program.
Professional hedge fund pitchbooks are designed to:
- Tell a hedge fund’s story and highlight the fund’s strategy and differentiation points
- Inform investors without overwhelming them with detail
- Entice investors to engage in deeper conversation around the fund offering
- Clearly describe and display the hedge fund offering and performance
Hedge funds must keep a few special points in mind when developing pitchbooks:
- Emerging Managers Need to Establish a Professional Brand Identity First – New fund managers may not think that having a logo or a brand guideline with a concrete color palette, font style, tagline, etc. is important to create ahead of the pitchbook process, but they’d be wrong. We discussed earlier how most people are visual learners. This goes for visual brand association and trust-building through optics. In a pitch, you get one chance to make a first impression; an interaction with a brand is what the investor relationship begins with; It must be strong, memorable, and convey trustworthiness, so a fund brand and fund logo must be thoughtfully and professionally crafted as a first step to lay the visual groundwork for the fund pitchbook, then the fund website, etc.
- Take a Unique Story Angle – With all the competing funds in the market, the way that emerging managers can help stand out from the crowd is by developing a truly unique angle to their story: whether through the fund’s unique name, the special pedigrees and experience of the managing principals, or through the fund’s proprietary algorithms or technology used to manage market risk. Creating a memorable story angle in the pitchbook narrative is key to carving out your differentiation from competitors.
Pitchbook Development Process Must-Haves
Whether you need a private equity pitchbook or a hedge fund pitchbook, a pitchbook is a true investment that should be crafted by specialized professionals who know how to shape the stories essential to a successful pitch.
What to look for in the professional pitchbook development process:
- Leverage an agency that specializes in financial industry pitchbooks – you won’t have to spend the time to educate them on what it is that you do, and they will come into the project with a base understanding to ask the questions that really matter.
- Customized design (not templated) that appeal to the optics of your target audience – from logos to layouts, charts, graphics or supplemental images, a firm needs to ensure that it is putting forth a genuine (not cookie-cutter) impression. If
- Content specialists who can interview your experts, review, edit, draft, and optimize your story – from reviewing offering memorandums to knowing where to place disclosures and understanding just how much content to place on each pitchbook slide, having experienced pitchbook content specialists is key.
- Ownership of the deliverable – your pitchbook should be delivered in an editable format so that you can make any key updates necessary ahead of your next pitch.
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